(Slip Opinion) OCTOBER TERM, 2013 1

Syllabus

NOTE: Where it is feasible, a syllabus (headnote) will be released, as is

being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been
prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.

SUPREME COURT OF THE UNITED STATES

Syllabus

CLARK ET UX. v. RAMEKER, TRUSTEE, ET AL.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR

THE SEVENTH CIRCUIT

No. 13–299. Argued March 24, 2014—Decided June 12, 2014

When petitioners filed for Chapter 7 bankruptcy, they sought to exclude
roughly $300,000 in an inherited individual retirement account (IRA)
from the bankruptcy estate using the “retirement funds” exemption.
See 11 U. S. C. §522(b)(3)(C). The Bankruptcy Court concluded that
an inherited IRA does not share the same characteristics as a tradi-
tional IRA and disallowed the exemption. The District Court re-
versed, explaining that the exemption covers any account in which
the funds were originally accumulated for retirement purposes. The
Seventh Circuit disagreed and reversed the District Court.
Held: Funds held in inherited IRAs are not “retirement funds” within
the meaning of §522(b)(3)(C). Pp. 4–11.
(a) The ordinary meaning of “retirement funds” is properly under-
stood to be sums of money set aside for the day an individual stops
working. Three legal characteristics of inherited IRAs provide objec-
tive evidence that they do not contain such funds. First, the holder of
an inherited IRA may never invest additional money in the account.
26 U. S. C. §219(d)(4). Second, holders of inherited IRAs are required
to withdraw money from the accounts, no matter how far they are
from retirement. §§408(a)(6), 401(a)(9)(B). Finally, the holder of an
inherited IRA may withdraw the entire balance of the account at any
time—and use it for any purpose—without penalty. Pp. 4–6.
(b) This reading is consistent with the purpose of the Bankruptcy
Code’s exemption provisions, which effectuate a careful balance be-
tween the creditor’s interest in recovering assets and the debtor’s in-
terest in protecting essential needs. Allowing debtors to protect
funds in traditional and Roth IRAs ensures that debtors will be able
to meet their basic needs during their retirement years. By contrast,
nothing about an inherited IRA’s legal characteristics prevent or dis-
2 CLARK v. RAMEKER

Syllabus

courage an individual from using the entire balance immediately af-

ter bankruptcy for purposes of current consumption. The “retirement
funds” exemption should not be read in a manner that would convert
the bankruptcy objective of protecting debtors’ basic needs into a
“free pass,” Schwab v. Reilly, 560 U. S. 770, 791. Pp. 6–7.
(c) Petitioners’ counterarguments do not overcome the statute’s
text and purpose. Their claim that funds in an inherited IRA are re-
tirement funds because, at some point, they were set aside for re-
tirement, conflicts with ordinary usage and would render the term
“retirement funds,” as used in §522(b)(3)(C), superfluous. Congress
could have achieved the exact same result without specifying the
funds as “retirement funds.” And the absence of the phrase “debtor’s
interest,” which appears in many other §522 exemptions, does not in-
dicate that §522(b)(3)(C) covers funds intended for someone else’s re-
tirement. Where used, that phrase works to limit the value of the as-
set that the debtor may exempt from her estate, not to distinguish
between a debtor’s assets and the assets of another. Also unpersua-
sive is petitioners’ argument that §522(b)(3)(C)’s sentence structure—
i.e., a broad category, here, “retirement funds,” followed by limiting
language, here, “to the extent that”—prevents the broad category
from performing any independent limiting work. This is not the only
way in which the phrase “to the extent that” may be read, and this
argument reintroduces the problem that makes the term “retirement
funds” superfluous. Finally, the possibility that an account holder
can leave an inherited IRA intact until retirement and take only the
required minimum distributions does not mean that an inherited IRA
bears the legal characteristics of retirement funds. Pp. 8–11.
714 F. 3d 559, affirmed.

SOTOMAYOR, J., delivered the opinion for a unanimous Court.

 Cite as: 573 U. S. ____ (2014) 1

Opinion of the Court

NOTICE: This opinion is subject to formal revision before publication in the

preliminary print of the United States Reports. Readers are requested to
notify the Reporter of Decisions, Supreme Court of the United States, Wash­
ington, D. C. 20543, of any typographical or other formal errors, in order
that corrections may be made before the preliminary print goes to press.

SUPREME COURT OF THE UNITED STATES

_________________

No. 13–299
_________________

BRANDON C. CLARK ET UX., PETITIONERS v.

WILLIAM J. RAMEKER, TRUSTEE, ET AL.
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE SEVENTH CIRCUIT
[June 12, 2014]

JUSTICE SOTOMAYOR delivered the opinion of the Court.

When an individual files for bankruptcy, she may ex­
empt particular categories of assets from the bankruptcy
estate. One such category includes certain “retirement
funds.” 11 U. S. C. §522(b)(3)(C). The question presented
is whether funds contained in an inherited individual
retirement account (IRA) qualify as “retirement funds”
within the meaning of this bankruptcy exemption. We
hold that they do not.
I
A
When an individual debtor files a bankruptcy petition,
her “legal or equitable interests . . . in property” become
part of the bankruptcy estate. §541(a)(1). “To help the
debtor obtain a fresh start,” however, the Bankruptcy
Code allows debtors to exempt from the estate limited
interests in certain kinds of property. Rousey v. Jacoway,
544 U. S. 320, 325 (2005). The exemption at issue in this
case allows debtors to protect “retirement funds to the
extent those funds are in a fund or account that is exempt
from taxation under section 401, 403, 408, 408A, 414, 457,
2 CLARK v. RAMEKER

Opinion of the Court

or 501(a) of the Internal Revenue Code.” §§522(b)(3)(C),

(d)(12).1 The enumerated sections of the Internal Revenue
Code cover many types of accounts, three of which are
relevant here.
The first two are traditional and Roth IRAs, which are
created by 26 U. S. C. §408 and §408A, respectively. Both
types of accounts offer tax advantages to encourage indi­
viduals to save for retirement. Qualified contributions to
traditional IRAs, for example, are tax-deductible. §219(a).
Roth IRAs offer the opposite benefit: Although contribu­
tions are not tax-deductible, qualified distributions are
tax-free. §§408A(c)(1), (d)(1). To ensure that both types of
IRAs are used for retirement purposes and not as general
tax-advantaged savings vehicles, Congress made certain
withdrawals from both types of accounts subject to a 10
percent penalty if taken before an accountholder reaches
the age of 59½. See §§72(t)(1)–(2); see also n. 4, infra.
The third type of account relevant here is an inher-
ited IRA. An inherited IRA is a traditional or Roth IRA
that has been inherited after its owner’s death. See
§§408(d)(3)(C)(ii), 408A(a). If the heir is the owner’s
spouse, as is often the case, the spouse has a choice: He or
she may “roll over” the IRA funds into his or her own IRA,
or he or she may keep the IRA as an inherited IRA (sub­
ject to the rules discussed below). See Internal Revenue
Service, Publication 590: Individual Retirement Arrange­
ments (IRAs), p. 18 (Jan. 5, 2014). When anyone other
than the owner’s spouse inherits the IRA, he or she may
not roll over the funds; the only option is to hold the IRA
——————
1 Under §522, debtors may elect to claim exemptions either under

federal law, see §522(b)(2), or state law, see §522(b)(3). Both tracks
permit debtors to exempt “retirement funds.” See §522(b)(3)(C) (re­
tirement funds exemption for debtors proceeding under state law);
§522(d)(12) (identical exemption for debtors proceeding under federal
law). Petitioners elected to proceed under state law, so we refer to
§522(b)(3)(C) throughout.
 Cite as: 573 U. S. ____ (2014) 3

Opinion of the Court

as an inherited account.
Inherited IRAs do not operate like ordinary IRAs. Un­
like with a traditional or Roth IRA, an individual may
withdraw funds from an inherited IRA at any time, with­
out paying a tax penalty. §72(t)(2)(A)(ii). Indeed, the
owner of an inherited IRA not only may but must with­
draw its funds: The owner must either withdraw the
entire balance in the account within five years of the
original owner’s death or take minimum distributions on
an annual basis. See §§408(a)(6), 401(a)(9)(B); 26 CFR
§1.408–8 (2013) (Q–1 and A–1(a) incorporating
§1.401(a)(9)–3 (Q–1 and A–1(a))); see generally D. Car­
tano, Taxation of Individual Retirement Accounts
§32.02[A] (2013). And unlike with a traditional or Roth
IRA, the owner of an inherited IRA may never make con­
tributions to the account. 26 U. S. C. §219(d)(4).
B
In 2000, Ruth Heffron established a traditional IRA and
named her daughter, Heidi Heffron-Clark, as the sole
beneficiary of the account. When Ms. Heffron died in
2001, her IRA—which was then worth just over
$450,000—passed to her daughter and became an inherited
IRA. Ms. Heffron-Clark elected to take monthly distri­
butions from the account.
In October 2010, Ms. Heffron-Clark and her husband,
petitioners in this Court, filed a Chapter 7 bankruptcy
petition. They identified the inherited IRA, by then worth
roughly $300,000, as exempt from the bankruptcy estate
under 11 U. S. C. §522(b)(3)(C). Respondents, the bank­
ruptcy trustee and unsecured creditors of the estate, ob­
jected to the claimed exemption on the ground that the
funds in the inherited IRA were not “retirement funds”
within the meaning of the statute.
The Bankruptcy Court agreed, disallowing the exemp­
tion. In re Clark, 450 B. R. 858, 866 (WD Wisc. 2011).
4 CLARK v. RAMEKER

Opinion of the Court

Relying on the “plain language of §522(b)(3)(C),” the court

concluded that an inherited IRA “does not contain any-
one’s ‘retirement funds,’ ” because unlike with a traditional
IRA, the funds are not “segregated to meet the needs of,
nor distributed on the occasion of, any person’s retire­
ment.” Id., at 863.2 The District Court reversed, explain­
ing that the exemption covers any account containing
funds “originally” “accumulated for retirement purposes.”
In re Clark, 466 B. R. 135, 139 (WD Wisc. 2012). The
Seventh Circuit reversed the District Court’s judgment.
In re Clark, 714 F. 3d 559 (2013). Pointing to the “[d]if-
ferent rules govern[ing] inherited” and noninherited IRAs,
the court concluded that “inherited IRAs represent an
opportunity for current consumption, not a fund of retire­
ment savings.” Id., at 560, 562.
We granted certiorari to resolve a conflict between the
Seventh Circuit’s ruling and the Fifth Circuit’s decision in
In re Chilton, 674 F. 3d 486 (2012). 571 U. S. ___ (2013).
We now affirm.
II
The text and purpose of the Bankruptcy Code make
clear that funds held in inherited IRAs are not “retirement
funds” within the meaning of §522(b)(3)(C)’s bankruptcy
exemption.
A
The Bankruptcy Code does not define “retirement
funds,” so we give the term its ordinary meaning. See
——————
2 The
Bankruptcy Court also concluded in the alternative that, even if
funds in an inherited IRA qualify as retirement funds within the
meaning of §522(b)(3)(C), an inherited IRA is not exempt from taxation
under any of the Internal Revenue Code sections listed in the provision.
See 450 B. R., at 865. Because we hold that inherited IRAs are not
retirement funds to begin with, we have no occasion to pass on the
Bankruptcy Court’s alternative ground for disallowing petitioners’
exemption.
 Cite as: 573 U. S. ____ (2014) 5

Opinion of the Court

Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572

U. S. ___, ___ (2014) (slip op., at 7). The ordinary meaning
of “fund[s]” is “sum[s] of money . . . set aside for a specific
purpose.” American Heritage Dictionary 712 (4th ed.
2000). And “retirement” means “[w]ithdrawal from one’s
occupation, business, or office.” Id., at 1489. Section
522(b)(3)(C)’s reference to “retirement funds” is therefore
properly understood to mean sums of money set aside for
the day an individual stops working.
The parties agree that, in deciding whether a given set
of funds falls within this definition, the inquiry must be an
objective one, not one that “turns on the debtor’s subjec­
tive purpose.” Brief for Petitioners 43–44; see also Brief
for Respondents 26. In other words, to determine whether
funds in an account qualify as “retirement funds,” courts
should not engage in a case-by-case, fact-intensive exami­
nation into whether the debtor actually planned to use the
funds for retirement purposes as opposed to current con­
sumption. Instead, we look to the legal characteristics of
the account in which the funds are held, asking whether,
as an objective matter, the account is one set aside for the
day when an individual stops working. Cf. Rousey, 544
U. S., at 332 (holding that traditional IRAs are included
within §522(d)(10)(E)’s exemption for “a payment under a
stock bonus, pension, profitsharing, annuity, or similar
plan or contract on account of . . . age” based on the legal
characteristics of traditional IRAs).
Three legal characteristics of inherited IRAs lead us to
conclude that funds held in such accounts are not objec­
tively set aside for the purpose of retirement. First, the
holder of an inherited IRA may never invest additional
money in the account. 26 U. S. C. §219(d)(4). Inherited
IRAs are thus unlike traditional and Roth IRAs, both of
which are quintessential “retirement funds.” For where
inherited IRAs categorically prohibit contributions, the
entire purpose of traditional and Roth IRAs is to provide
6 CLARK v. RAMEKER

Opinion of the Court

tax incentives for accountholders to contribute regularly

and over time to their retirement savings.
Second, holders of inherited IRAs are required to with­
draw money from such accounts, no matter how many
years they may be from retirement. Under the Tax Code,
the beneficiary of an inherited IRA must either withdraw
all of the funds in the IRA within five years after the year
of the owner’s death or take minimum annual distribu­
tions every year. See §408(a)(6); §401(a)(9)(B); 26 CFR
§1.408–8 (Q–1 and A–1(a) incorporating §1.401(a)(9)–3
(Q–1 and A–1(a))). Here, for example, petitioners elected
to take yearly distributions from the inherited IRA; as a
result, the account decreased in value from roughly
$450,000 to less than $300,000 within 10 years. That the
tax rules governing inherited IRAs routinely lead to their
diminution over time, regardless of their holders’ proxim­
ity to retirement, is hardly a feature one would expect of an
account set aside for retirement.
Finally, the holder of an inherited IRA may withdraw
the entire balance of the account at any time—and for any
purpose—without penalty. Whereas a withdrawal from a
traditional or Roth IRA prior to the age of 59½ triggers a
10 percent tax penalty subject to narrow exceptions, see
n. 4, infra—a rule that encourages individuals to leave
such funds untouched until retirement age—there is no
similar limit on the holder of an inherited IRA. Funds
held in inherited IRAs accordingly constitute “a pot of
money that can be freely used for current consumption,”
714 F. 3d., at 561, not funds objectively set aside for one’s
retirement.
B
Our reading of the text is consistent with the purpose of
the Bankruptcy Code’s exemption provisions. As a general
matter, those provisions effectuate a careful balance be­
tween the interests of creditors and debtors. On the one
 Cite as: 573 U. S. ____ (2014) 7

Opinion of the Court

hand, we have noted that “every asset the Code permits a

debtor to withdraw from the estate is an asset that is not
available to . . . creditors.” Schwab v. Reilly, 560 U. S.
770, 791 (2010). On the other hand, exemptions serve
the important purpose of “protect[ing] the debtor’s essen­
tial needs.” United States v. Security Industrial Bank,
459 U. S. 70, 83 (1982) (Blackmun, J., concurring in
judgment).3
Allowing debtors to protect funds held in traditional and
Roth IRAs comports with this purpose by helping to en­
sure that debtors will be able to meet their basic needs
during their retirement years. At the same time, the legal
limitations on traditional and Roth IRAs ensure that
debtors who hold such accounts (but who have not yet
reached retirement age) do not enjoy a cash windfall by
virtue of the exemption—such debtors are instead re­
quired to wait until age 59½ before they may withdraw
the funds penalty-free.
The same cannot be said of an inherited IRA. For if an
individual is allowed to exempt an inherited IRA from her
bankruptcy estate, nothing about the inherited IRA’s legal
characteristics would prevent (or even discourage) the
individual from using the entire balance of the account on
a vacation home or sports car immediately after her bank­
ruptcy proceedings are complete. Allowing that kind of
exemption would convert the Bankruptcy Code’s purposes
of preserving debtors’ ability to meet their basic needs and
ensuring that they have a “fresh start,” Rousey, 544 U. S.,
at 325, into a “free pass,” Schwab, 560 U. S., at 791. We
decline to read the retirement funds provision in that
manner.
——————
3 As the House Judiciary Committee explained in the process of enact­

ing §522, “[t]he historical purpose” of bankruptcy exemptions has been

to provide a debtor “with the basic necessities of life” so that she “will
not be left destitute and a public charge.” H. R. Rep. No. 95–595, p. 126
(1977).
8 CLARK v. RAMEKER

Opinion of the Court

III
Although petitioners’ counterarguments are not without
force, they do not overcome the statute’s text and purpose.
Petitioners’ primary argument is that funds in an inher­
ited IRA are retirement funds because—regardless of
whether they currently sit in an account bearing the legal
characteristics of a fund set aside for retirement—they did
so at an earlier moment in time. After all, petitioners
point out, “the initial owner” of the account “set aside the
funds in question for retirement by depositing them in a”
traditional or Roth IRA. Brief for Petitioners 21. And
“[t]he [initial] owner’s death does not in any way affect the
funds in the account.” Ibid.
We disagree. In ordinary usage, to speak of a person’s
“retirement funds” implies that the funds are currently in
an account set aside for retirement, not that they were set
aside for that purpose at some prior date by an entirely
different person. Under petitioners’ contrary logic, if an
individual withdraws money from a traditional IRA and
gives it to a friend who then deposits it into a checking
account, that money should be forever deemed “retirement
funds” because it was originally set aside for retirement.
That is plainly incorrect.
More fundamentally, the backward-looking inquiry
urged by petitioners would render a substantial portion of
11 U. S. C. §522(b)(3)(C)’s text superfluous. The funds
contained in every individual-held account exempt from
taxation under the Tax Code provisions enumerated in
§522(b)(3)(C) have been, at some point in time, “retirement
funds.” So on petitioners’ view, rather than defining the
exemption to cover “retirement funds to the extent that
those funds are in a fund or account that is exempt from
taxation under [the enumerated sections] of the Internal
Revenue Code,” Congress could have achieved the exact
same result through a provision covering any “fund or
account that is exempt from taxation under [the enumer­
 Cite as: 573 U. S. ____ (2014) 9

Opinion of the Court

ated sections].” In other words, §522(b)(3)(C) requires that

funds satisfy not one but two conditions in order to be
exempt: the funds must be “retirement funds,” and they
must be held in a covered account. Petitioners’ reading
would write out of the statute the first element. It there­
fore flouts the rule that “ ‘a statute should be construed so
that effect is given to all its provisions, so that no part will
be inoperative or superfluous.’ ” Corley v. United States,
556 U. S. 303, 314 (2009).
Petitioners respond that many of §522’s other exemp­
tions refer to the “debtor’s interest” in various kinds of
property. See, e.g., §522(d)(2) (exempting “[t]he debtor’s
interest, not to exceed [$3,675] in value, in one motor
vehicle”). Section 522(b)(3)(C)’s retirement funds exemp­
tion, by contrast, includes no such reference. As a result,
petitioners surmise, Congress must have meant the provi­
sion to cover funds that were at one time retirement ac­
counts, even if they were for someone else’s retirement.
Brief for Petitioners 33–34. But Congress used the phrase
“debtor’s interest” in the other exemptions in a different
manner—not to distinguish between a debtor’s assets and
the assets of another person but to set a limit on the value
of the particular asset that a debtor may exempt. For
example, the statute allows a debtor to protect “[t]he
debtor’s aggregate interest, not to exceed [$1,550] in value,
in jewelry.” §522(d)(4). The phrase “[t]he debtor’s aggre­
gate interest” in this provision is just a means of introduc­
ing the $1,550 limit; it is not a means of preventing debt­
ors from exempting other persons’ jewelry from their own
bankruptcy proceedings (an interpretation that would
serve little apparent purpose). And Congress had no
need to use the same “debtor’s interest” formulation in
§522(b)(3)(C) for the simple reason that it imposed a value
limitation on the amount of exemptible retirement funds
in a separate provision, §522(n).
Petitioners next contend that even if their interpreta­
10 CLARK v. RAMEKER

Opinion of the Court

tion of “ ‘retirement funds’ does not independently exclude

anything from the scope of the statute,” that poses no
problem because Congress actually intended that result.
Reply Brief 5–6. In particular, petitioners suggest that
when a sentence is structured as §522(b)(3)(C) is—starting
with a broad category (“retirement funds”), then winnow­
ing it down through limiting language (“to the extent that”
the funds are held in a particular type of account)—it is
often the case that the broad category does no independent
limiting work. As counsel for petitioners noted at oral
argument, if a tax were to apply to “sports teams to the
extent that they are members of the major professional
sports leagues,” the phrase “sports teams” would not
provide any additional limitation on the covered entities.
Tr. of Oral Arg. 15.
There are two problems with this argument. First,
while it is possible to conceive of sentences that use
§522(b)(3)(C)’s “to the extent that” construction in a man­
ner where the initial broad category serves no exclusion­
ary purpose, that is not the only way in which the phrase
may be used. For example, a tax break that applies to
“nonprofit organizations to the extent that they are medi­
cal or scientific” would not apply to a for-profit pharma­
ceutical company because the initial broad category (“non­
profit organizations”) provides its own limitation. Just so
here; in order to qualify for bankruptcy protection under
§522(b)(3)(C), funds must be both “retirement funds” and
in an account exempt from taxation under one of the
enumerated Tax Code sections.
Second, to accept petitioners’ argument would reintro­
duce the surplusage problem already discussed. Supra, at
8–9. And although petitioners are correct that “the only
effect of respondents’ interpretation of ‘retirement funds’
would seemingly be to deny bankruptcy exemption to
inherited IRAs,” Reply Brief 2, as between one interpreta­
tion that would render statutory text superfluous and
 Cite as: 573 U. S. ____ (2014) 11

Opinion of the Court

another that would render it meaningful yet limited, we

think the latter more faithful to the statute Congress
wrote.
Finally, petitioners argue that even under the inquiry
we have described, funds in inherited IRAs should still
qualify as “retirement funds” because the holder of such
an account can leave much of its value intact until her
retirement if she invests wisely and chooses to take only
the minimum annual distributions required by law. See
Brief for Petitioners 27–28. But the possibility that some
investors may use their inherited IRAs for retirement
purposes does not mean that inherited IRAs bear the
defining legal characteristics of retirement funds. Were it
any other way, money in an ordinary checking account (or,
for that matter, an envelope of $20 bills) would also
amount to “retirement funds” because it is possible for an
owner to use those funds for retirement.4
* * *
For the foregoing reasons, the judgment of the United
States Court of Appeals for the Seventh Circuit is
affirmed.
It is so ordered.

——————
4 Petitioners also argue that inherited IRAs are similar enough to

Roth IRAs to qualify as retirement funds because “the owner of a Roth

IRA may withdraw his contributions . . . without penalty.” Brief for
Petitioners 44. But that argument fails to recognize that withdrawals
of contributions to a Roth IRA are not subject to the 10 percent tax
penalty for the unique reason that the contributions have already been
taxed. By contrast, all capital gains and investment income in a Roth
IRA are subject to the pre-59½ withdrawal penalty (with narrow
exceptions for, for example, medical expenses), which incentivizes use
of those funds only in one’s retirement years.